The ownership of wealth

Islam has a unique dispensation on the concept of wealth, its ownership and distribution. Wealth in Islam is not an end in itself, but a means to higher values. It should be earned, invested and spend in the correct avenues, and it should reward the individual, his family, and the society as a whole. Its rewards also span this life as well as the hereafter.

According to the Islamic concept, wealth is considered as an endowment or a gift from God and human beings are considered as trustees on God’s resources on earth. These resources are to be wisely treated, not abused, destroyed, wasted or left to idle. This dual ownership mitigates the selfish and unfair tendencies that often result from a mistaken notion of absolute ownership.

However, Islam doesn’t oppose any material pursuit neither it is against the accumulation of wealth. The only concern it put forward is the danger of obsessive preoccupation in accumulating and conglomerating wealth to the extent sidelining spirituality.

Islam also provides a broad foundation of the distribution of income and wealth to avoid its accumulation. It does not advocate equal distribution of wealth in the sense that all individuals should have the same means from livelihood, but guarantees a process of distribution where all participants in the marketplace are rewarded for being exposed to risk and liability. Land, labour and capital jointly create value and the capital owner has to share in the profit as well as in the loss.

Besides, Islam compulsorily retains a share of produced wealth by paying the Zakat (Charity) to the needy and other charitable deeds; and therefore spreads out wealth in the community. The institution of Zakat is not only a source of alleviating the sufferings of the poor, but also provides an incentive to invest the surplus wealth in the real sectors of the economy. Muslims are yet encouraged to voluntary give part of their income as a waqf for social economic welfare.

Moreover, the abolition of Riba prevents unfair lending schemes which penalize the poor and allows for those possible alternatives of investment which distribute the return on capital on a broader basis.

Finally, the law of inheritance in Islam ensures that accumulated wealth and large holdings would be divided into relatively smaller fragments.

Islamic vs materialistic perspective

The primary difference between Islamic economics and all materialist ones is that that economic well being is not viewed in Islam as the ultimate end of human life and cannot be the true purpose of life. Economic endeavours become a delusion if human beings lose sight of the real purpose in their pursuit. Instead Islam insists on the concept of human Welfare that has both a material and spiritual dimensions.
In addition, unlike the materialistic perspective, the Shari’ah considers that the main economic problem that mankind will ever face is that of distribution of wealth and not of production. In the eyes of the conventional economics systems, there is relative scarcity of resources available on the earth, and people’s demands for these resources are endless. Hence individuals and organisations should concentrate on more and more production. Whereas, Islam makes a distinction between basic needs such as food, clothing and shelter, and comfortable wants that are not necessities in life. It considers that there are enough resources to satisfy the basic needs of each and every individual and to satisfy some of their luxurious wants and that economic problem is that of distribution and not production. Islam advocates specific regulations by which wealth can be acquired, used and disposed of. It is through that specific economic system that economic justice in society is maintained.
In the Islamic perspective, there are people who acquire wealth by engaging in the production process and others who have an indirect access to wealth in the form of Zakat, Waqf, inheritance, etc. which are given to the poor, the needy and later generations.
Notwithstanding this, Islam it gives full incentives to individuals to fully participate in the economy and it does not impose a maximum on the total of wealth that individuals or organisations can own. Rather, it controls the means of ownership such that everybody gets the right to wealth in a just manner. Through these ownership principles, Islam guarantees that everyone gets what is rightfully due to him from God, unlike the capitalist system where only those who take part in the production process have the right to wealth.
Additionally, Interest rates form the backbone of the capitalist system in many fields. It is used as a tool to regulate economic growth and monetary supply by acting as an incentive for those who have surplus money to save. In Islam interest is prohibited; Investment, according to the Shari'ah, should offer individuals the opportunity to profit, not by lending at a guaranteed rate of return, but by sharing in ownership, and thus committing to share in the risks associated with ownership. The abolition of Riba avoids inequitable lending transactions which penalize the deprived part of the society. By this means, Islamic economics seeks to provide for a just and equitable distribution of wealth and aims at re-establishing a socio-economic balance, with a clear bias in favour of the poor and the needy.